Consumer Packaged Goods: 4 Factors Driving Big Changes in CPG Packaging
Suppliers who market consumer packaged goods want to learn more about improving their packaging strategies while meeting sustainability goals. The packaging industry constantly changes due to laws, consumer demands, and supplier innovation. So, frequent packaging improvement is required at the top of the supply chain. How can this be practiced?
The consumer packaged goods industry (the CPG industry) is one of the major trade sectors. CPG is the arena where famous brands, known as CPG brands, compete with smaller companies for shelf space in brick-and-mortar stores. Changes in the availability of packaging styles open up new opportunities for consumer packaged goods companies looking to advance. When suppliers confront their packaging and marketing challenges, they can adopt advances that will change CPG forever.
What Is CPG?
CPG stands for consumer packaged goods, which consumers use and must replace or replenish frequently. CPG meaning: Investopedia defines CPG as products that are used up or depleted daily by average end-users and require routine replacement, such as foods and drinks, tobacco products, perfumes and makeup, toilet paper, soaps, toiletries, janitorial supplies, everyday household items, everyday office consumables, frozen meals, and cleaning supplies. CPGs are frequently purchased, not to be confused with fast-moving consumer goods that are used up even faster than CPGs.
The CPG market is thriving, allowing CPG firms to observe changing consumer patterns and note consumer preferences. Research shows that consumers’ concerns are tied to sustainability (after price, quality, brand, and convenience). This has prompted around 40% of CPG firms to respond to consumers’ requests to accept responsibility for sustainability objectives. Packaging producers for CPG consumer goods must collect feedback through market research and customer research and apply a “consumer back” strategy to understand and supply consumers’ needs as they develop.
The CPG Industry
The CPG sector is a busy, growing sector of the sales market, adding $2 trillion to the Gross Domestic Product (GDP.) Yahoo Finance reports on a study by Towards Packaging that globally, the consumer packaged goods market will be worth close to $3,171 billion by 2032. The CAGR is calculated to be 4.1% until 2032. Metaverse (interconnected) markets are encouraging CPG companies to leverage international opportunities. The food and beverage industry is the largest contributor to CPG sales. The study describes CPG manufacturing as “robust” since it grows steadily at 8% annually year-over-year. The projected annual sales figure is $1.62 trillion.
4 Key Characteristics of CPGs
Specific aspects characterize the CPG industry:
Tangible: CPGs are items consumers can touch and hold, not services.
Consumable: CPGs have a relatively short useful life, after which they will be worn out or used. The opposite of CPGs is durable goods, which are goods intended to be used for a considerable time.
Affordable: CPGs cost relatively little so many consumers can afford them. Consumer spending on appearance and health is high; people purchase these more frequently than durable goods such as washing machines.
Recognizable: CPGs are often supplied by the biggest CPG companies and are white-labeled or branded by leading brands.
Packaging Needs in the CPG Industry: Then and Now
Packaging strategies reflect changing sociological truths. While most grocery shoppers used to shop in a supermarket, a significant percentage now do so online. Competition for supermarket shelf space is fierce, and packaging must reflect these changes.
In his McKinsey interview, Ron Delia made an important point: By achieving CPG packaging goals, manufacturers can remove the guilt from the packaging, ensuring consumers can enjoy CPG products without feeling they are damaging the world or shouldn’t be buying them.
Compare traditional and newer packaging goals for consumer packaged goods:
Factors in Traditional CPG Packaging
Since shoppers use up consumer packaged goods quickly, buying and replacing them at a high frequency, the packaging of CPG products must be:
Streamlined – use less space on the shelf per product
Minimalist – take up less space on the retail shelves and in consumers’ homes
Eco-friendly – take up less space in the disposal system
Easy to open – meet the needs of the average consumer
Packaging In The CGP Industry: Advancing on 4 Fronts
Packaging for consumer packaged goods must reflect the market’s needs, and that market is evolving. The rise in e-commerce is one factor driving those changes. The consumer packaged goods experience means packaging must satisfy newer needs.
In e-commerce, products need to be packaged so that they will advance CPG marketing efforts.
1. CPG Goods That Are Easy To Ship
Packaging must be stronger to survive local and international journeys intact. Packaging that is flexible or shaped conveniently can be shipped directly to the consumer. Light packaging helps you reduce the amount of gas used because it is lighter, and where you can send more products in the carton because you are not ‘shipping air.’ That is packaging designed for more economical shipping – and improving the sales figures.
2. CGP Packaging That Is More Sustainable
Improvements in the types of packaging used answer consumers’ demands for reducing greenhouse gases and reusing materials; manufacturers take responsibility for causing the least possible harm through their packaging strategy. Giving consumers what they want will ensure consumer loyalty to the brand in a market where there is lively competition.
3. More Compelling Consumer Packaging
The unboxing experience is when the product makes its debut (the ‘wow moment’) without the in-store, facing-the-shelves experience. The packaging itself must do all the work of appealing to the consumer. The more compelling packaged goods appear the more products will sell. A direct-to-consumer business must invest in the ever-evolving market of CPGs. There is ongoing competition as consumers continue to investigate private labels over band names.
4. A More inclusive CPG Experience
E-commerce packaging, like online shopping, must be designed for accessibility. Consumers with disabilities are more likely to purchase products through e-commerce channels. A survey by Fable revealed that 50% of people with disabilities shopped online for CPGs weekly, and 6% of them shopped daily. This indicates a fertile market that it makes business sense to marketing to and will yield more profits.
Issues That Could Delay Digitization of CPG Marketing
It comes as little surprise that packaging, too, is on the way to being digitized. Plans are in the making for digital price labels that will reduce themselves as the product reaches its sell-by date, and packaging that will include printed circuits or digital stamps indicating packaging material type to sorting robots. Analysts estimate that the CPG digital transformation will be complete, with a digitized and automated supply chain, by 2035 – includes the packaging industry.
The advances in CPG means that the following issues disturbing CPG packaging advances will need to be resolved:
Cybersecurity and privacy issues.
Leaders need to become digitalization experts and understand CPG and packaging trends.
Upgrading hardware and software due to cost and availability.
As players adopt digitization at different times, they will be at different stages of digitization, which will create economic uncertainty along the supply chain.
Development and enforcement of applicable laws and regulations.
The learning curve as workers along the supply chain acquire the new skills that digitization requires.
Overcoming limitations in the recycling framework. The demand for post consumer recycled content as a raw material has outstripped supply. Manufacturing companies are prepared to use three times as much PCR as there is available.
Consumer education to explain what CPG companies are doing – such as by putting carbon footprint information on the packaging.
(With thanks to the McKinsey CPG interview by Monica Toriello with David Feber and Ron Delia.)
Folene Packaging Is Here to Support The CPG Industry And Packaging Advances
Folene Packaging manufactures and markets a full range of shrink wraps that are a sustainable, economical, and versatile solution for packaging CPGs. Using irradiated or non-irradiated shrink film can help you package your consumer goods securely while saving on packaging material weight and space – checking the boxes for sustainability and suitability for e-commerce. We offer cross-linked shrink films, which is thinner and stronger, and the latest addition to the range, Ecolene AP-XPCR, which includes post-consumer content, and is both recycled and biodegradable.
Folene Packaging uses European Grade raw materials yet the polyolefin film is produced locally in the U.S. which drives down lead time to as little as 2 days!
Contact us to learn more about how Folene Packaging can help you embrace stronger and thinner packaging for your consumer packaged goods.
Consumer Packaged Goods FAQs:
What does CPG stand for?
CPG stands for “consumer packaged goods.” The main categories of CPGs are food and beverages, like bread and meat, fruit, vegetables and frozen meals; household products, like air fresheners, tissue paper and trash bags; personal care products, like shampoo and soap; cosmetics, like makeup and perfumes; and healthcare products/OTC medications, like pain relievers and plasters. Marketing often influences decisions of consumers, and, since shoppers purchase CPG consumer goods so frequently, CPG brands invest a lot in marketing.
What are the CPG brands?
Some of the most well-known CPG companies include food and beverage companies such as Nestle, Unilever, PepsiCo, Coca-Cola, and Kraft Heinz; household cleaning producers such as Procter & Gamble, Clorox, Kimberly-Clark, and SC Johnson & Son; personal toiletries such as L’Oreal, Johnson & Johnson, Colgate-Palmolive, and Unilever; and cosmetics such as Estee Lauder, L’Oreal, Avon, and Shiseido (Source: OIS). These and other major companies are known as CPG brands, since consumers recognize their products by the brand name their products are sold under. CPG brand companies make and sell the everyday items consumers purchase from online or retail stores, and enjoy brand equity from marketing products with an identifiable name.
